Krispy Kreme Doughnuts, Inc. (NYSE/KKD) shares soared in Thursday (June 11) trading after the company reported blow-out financial results. This suggests that the coffee and doughnut chain still has a lot of room to grow.
After the closing bell on Wednesday, Krispy Kreme reported its financial results for the first quarter of fiscal 2015 ended May 3. (Source: Krispy Kreme Doughnuts Inc., June 10, 2015.)
Revenues gained a surprising nine percent; increasing from $121.6 million to $132.5 million. Part of the company’s success in the first quarter was due to solid performance of domestic same-store sales, which rose 5.2%, with the company’s stores gaining 4.3%.
Higher sales also trickled down to the bottom line. Net income increased 10.5% to $10.7 million. Adjusted earnings per share (EPS) came in at $0.24, beating analysts’ expectation of $0.22 according to numbers compiled by Reuters.
Markets welcomed the good results. Shares surged more than 10% to $19.22 during Thursday’s trading, closing in on the stock’s 52-week high.
“Solid domestic same-store sales growth and improved margin performance at our Company shops enabled us to exceed our internal projections for the first quarter, providing us a strong start to the fiscal year.” President and Chief Executive Officer Tony Thompson said in a press release.
“Guests continued to respond favorably to our limited time offerings. This, combined with our more strategic use of promotional incentives, drove the higher profitability.”
In light of these strong results, management is stepping up their expansion plans. The company plans to open 10 to 12 new company shops, and 15 to 20 domestic franchise shops. Internationally, Krispy Kreme would see between 95 and 110 franchise stores opening this fiscal year.
Management alsorevised their outlook for fiscal 2016, projecting adjusted net income to be between $55.0 million and $59.0 million for the year—significantly higher than the $48.3 million reported in fiscal 2015.
All of this suggests the doughnut chain may have a longer growth runway than anyone had anticipated.
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